Big Winners in Vegas are Netflix and Yahoo: CES 2009 Analysis

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Oct 30, 2009

(Photograph by Colin Anderson/Getty Images)

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Las Vegas– Perhaps the most important technology announcements during the CES Press Day came from companies that didn't have press conferences. Yahoo and Netflix have become some of the most influential players in the consumer electronics market. Almost all new HDTV launches today have involved some sort of Internet connectivity, and two of the biggest HDTV manufacturers, LG and Samsung, are building in Yahoo TV widgets into their connected TVs, a technology I wrote about last summer.

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Internet browsing on the TV has always been an awkward fit, a mix of lean-forward and lean-back interface that can hijack a multi-person viewing experience to answer a single person's search query. Yet the Internet is becoming an extraordinarily rich content delivery vehicle, and TV manufacturers know that. Yahoo's widgets may or may not catch on, but the beauty of the widget user interface is that it is bite-sized and it hides away when you don't need it. Also, since the widget interface is extensible, new functions can be added as time goes on. At launch, it will probably deliver Flickr photos, stock quotes and weather and sports info. But in the future, widgets could provide an alternative to the traditional television channel paradigm. If NBC decides that it wants to launch a video widget for delivery of on-demand programs, then it doesn't need to negotiate with dozens of cable companies for a channel, they only need to design a widget and launch it on the TV widget platform.

Perhaps the most surprising new powerhouse in the connected TV space is Netflix, which is delivering streaming movies to Blu-ray players from Samsung and LG, as well as to Microsoft's Xbox 360 through Xbox Live. Netflix is gaining traction with its streaming movie service at an astounding rate, positioning the upstart DVD rental company to become for movie streaming what Apple's iTunes is to music downloads—a muscular power player that can make demands of both the movie industry as well as the consumer electronics industry. To be sure, there are other players in the connected video-on-demand market: Apple has its own Apple TV, LG also is partnered with CinemaNow and Panasonic's connected home theater gear will link to Amazon's video on demand service, but Netflix offers the most compelling consumer proposition. One monthly fee equals unlimited instant movie watching. Selling or renting individual movies requires a consumer to make a buying decision each time: Is that movie worth it? Maybe, maybe not. But Netflix subscribers can browse from movie to movie. Who needs to steal content when it's all available instantly? If the movie industry embraces the Netflix philosophy, it may be able to avoid the problems of copyright theft that have plagued and nearly ruined the music industry. —Glenn Derene